📈 Middle East Conflict to Slow Global Growth to 2.5% in 2026, World Bank Warns

The Middle East conflict is set to drag global growth down to its lowest post-pandemic rate, driven by surging energy prices, higher inflation, and steeper borrowing costs, according to the World Bank’s latest report. Overall Figures & Key Forecasts • Global growth is projected to slow to 2.5% in 2026 (down from 2.9% in 2025) before recovering slightly to 2.8% in 2027. • Developing economies will hit a post-pandemic growth low of 3.6% in 2026, down from 4.4% in 2025. • Global inflation is expected to rise to 4.0% this year, up from 3.3% in 2025. Downside risks could see growth plummet to 1.3% if disruptions worsen. Energy, Food & Financial Disruptions • Brent crude oil is projected to average US$ 94 a barrel in 2026, a 36% YoY increase from 2025, due to the closure of the Strait of Hormuz. • Significant spikes in fertilizer prices are expected to trigger knock-on inflation for food prices, heavily impacting import-reliant agricultural sectors like local tea and food production lines. Regional & Sector Impacts • South Asia will maintain the strongest growth globally, though slowing from 7.0% in 2025 to 6.3% in 2026. • Gulf economies will see growth tumble from 3.9% in 2025 to near zero in 2026, directly threatening foreign employment and remittance inflows critical to national context stability. • Commodity exporters face weaker fiscal stability due to volatile, non-diversified revenues. Aggregate debt in developing nations has jumped from under 40% of GDP in 2010 to over 70%, spiking borrowing costs. Emergency Funding Response • The World Bank is deploying an initial US$ 50-60 Bn (up to US$ 100 Bn over 15 months) to provide liquidity, support firms and farms, and bolster fiscal capacity across affected developing nations.